Recycling changed dramatically in 2018, when China went from
accepting 45% of the world’s plastic waste to almost none. As a result, by
2030, up to 111 million metric tons of plastic could be displaced.[1]
All that extra plastic, as well as the paper and other
materials China is refusing, has significant and far-reaching effects. It
impacts waste management systems and the economics of recycling, and it may
also force people to re-evaluate their behavior.
In this article, the authors examine apartment rents in
Lodz, Poland, to see whether proximity to “green space” (defined as parks,
forests, cemeteries, and allotment gardens) could be considered a luxury good,
by which the willingness to pay increases disproportionately as income increases.
The authors examined how apartment rents varied according to distance to green
space, while controlling for other factors such as square footage and other
characteristics. Results demonstrate that proximity to parks and forests has a
positive effect on apartment rents – in other words, the closer the park or
forest, the higher the apartment rent. However, the results demonstrated that
proximity to cemeteries has a negative effect on apartment rents. Although the
authors did not discuss this, there is an environmental justice component at
play here – if proximity to urban green space is considered a luxury good, then
low-income housing is likely associated with a lack of urban green space.
Sites such as national parks and other outdoor recreation
parks must pursue the dual goal of environmental conservation and attracting
recreation. Managers of such sites
constantly face the challenge of increasing visitors without destroying the
attributes that appeal to such visitors in the first place. However, models that predict how attractive a
site is to recreation are typically different from those that predict how
ecosystem services vary by site. Because of this, it is difficult for managers
to evaluate land use tradeoffs. The authors of this study combine data on
visitation to a national park in France with spatial data showing characteristics
of the specific areas that were visited, and simultaneously relied on a model
that predicts habitat quality (the InVEST software). The authors find a
negative correlation between the attractiveness of a site to recreation and
habitat quality, implying that the two goals (increasing recreation and
preserving biodiversity and habitat quality) are at odds. This is not terribly
surprising. However, the integration of the economic “travel cost” model with
the habitat quality model may be helpful to evaluate the trade-offs arising
from land use change proposals.
In Maine, as well as in other states, the possibility of
using wind farms to generate more renewable electricity has become a key
strategy in mitigating climate change. In many cases, wind farms are sited on
agricultural farms as a possible added source of income to farmers. However,
one of the possible externalities of wind farms – the effect of wind farms on
crop yields – has not been much studied in the economics literature. This
article examines microclimate effects: the changes in local temperature,
moisture, and carbon dioxide concentrations due to “vertical mixing,
turbulence, and wakes created by wind turbines that extend well-beyond their
local footprint” (p 159). The article itself is fascinating – describing the
scientific microclimate effects of wind farms and their resulting effects on
crop yields (soy, wheat, corn, hay, and wheat). Fortunately for advocates of
wind power, effects of wind farms on crop yields are either positive (in the
case of corn, soy, and hay) or statistically insignificant (in the case of
wheat).
A fascinating and timely study, this article considers the
effects of recreational marijuana legalization on forest management and
conservation efforts. The authors point
out that illicit drug crop cultivation has actually been identified as a “major
stressor impacting the management of public lands,” as over half of the
marijuana plants eradicated in 2008 had been grown on public lands. The
environmental impacts of such illegal cultivation has led to removal of native
vegetation, diversion of natural waterways, agro-chemical pollution, and
littering. Furthermore, safety concerns organized crime syndicates had made it
difficult for national forest employees and researchers to pursue management
goals. Finally, the US Forest Service had to spend resources on monitoring and
enforcement, meaning that they could not devote those same resources to other
pursuits. The authors attempted to discover whether the legalization of
marijuana had reduced the amount of illegal grow sites, which in turn would
reduce both environmental and safety concerns. They conclude that “the
legalization of recreational cannabis is significantly correlated with a
reduction in the annual number of discovered grow sites in national forests in
Oregon, while found insignificant in Washington (47).”
Five questions to ask before doing an economic analysis
Every so often, I get requests to do an economic impact analysis of a local tourism event, or a new business that’s recently opened in the area. The person that is asking usually knows enough about an economic analysis to know that they need one (or think they do), but not always enough to make sure that it’s done right, or that the results will be helpful. In this blog post, I’ll discuss what an economic impact analysis is, how one is conducted, and some questions your organization should ask to make sure that it is done appropriately.
There is a fair degree of confusion about what an economic impact analysis is – and what it is not. One of the best ways I’ve found to describe it is to tell a story.
Suppose that a new minor league baseball stadium was proposed to be built in your town. There are proponents and detractors of the idea, and they both have numbers to back up their position. For sure, the minor league stadium will attract visitors, create jobs, and bring in revenue; proponents of the stadium point to all of those good things. But detractors of the stadium point to the fact that even if the stadium were not built, something else would be built in its place. The proper comparison, then, is not the stadium versus nothing, but the stadium versus the next best alternative. Who’s right?
The answer, of course, is that they’re both right, and that it depends upon the situation. It’s important to understand the types of economic analyses that are out there, both when your organization wants to undertake one and when you’re trying to interpret one.
Here are five questions to consider:
1. Economic contribution or economic impact analysis?
While the two phrases may sound the same, they are in fact quite different, and may lead to some very different results. An economic contribution analysis looks at gross changes to the local economy as a result of the activity being studied. In other words, an economic contribution analysis considers the revenue associated with an event, but it does not take into account any “crowding out” of other activity that might otherwise have occurred.
For example, I’ve recently been asked how I would measure the economic impact of a large sporting event that takes place annually in southern Maine and draws people from all over the country, and some from abroad. Hotels and motels are full at that time, and anyone wishing to book a vacation in the area may be out of luck. Where do those “discouraged visitors” go? If they rebook their southern Maine vacation for another time, then those visitors are not “lost” to the region- but if they go elsewhere due to no vacancy, then that should be counted as an economic cost of the event.
While the above example shows the “crowding out” due to an activity, it is sometimes hard to distinguish new economic activity versus just “reshuffled” economic activity.
Another example: the conference I recently analysed used local caterers for its food. Is the money paid to those vendors directly attributable to the conference? Yes, but in the absence of that particular conference, would those vendors have taken other jobs? If yes, then the money paid to those vendors may be a gross contribution to the economic activity in the area, but cannot be considered a net contribution -and therefore could not be considered part of its net economic impact.
Another recent example has to do with a proposed whitewater kayaking park in southern Maine. We could estimate the number of kayakers who might come to such a park, and the amount of money they might spend in the local economy – but would those kayakers have gone to another whitewater kayaking park in its absence? In other words, how much of that economic activity is new, rather than just reshuffled?
2. At what scale should you measure your impacts?
Most economic impact analyses can be done at the State, county, or regional level, depending on the type of event and the data that are available. For example, I was recently asked to do an economic analysis of a conference that occurred in Portland, Maine, but for which the attendees came mainly from elsewhere in Maine. In that case, it wouldn’t make sense to do an analysis at the state level, since only a small percentage of the economic activity attributed to the conference came from outside the state. In that case, it was more appropriate to consider the county as the reference region. We then needed to determine how many of the participants came from Cumberland county versus outside the county.
This question is important to answer beforehand, because it may determine the type of data you need to collect from your conference attendees.
3. Should you consider effects on prices?
Yet another way in which an economic impact analysis differs from an economic contribution analysis is through the former’s emphasis on resulting factor price changes. For example, it might be tempting to measure the economic contribution of a new manufacturing plant moving to town. But if the local economy is already at full employment, and the plant brings in workers from elsewhere, those workers will need a place to live. That may actually increase housing prices in the area, leading to the displacement of local workers. It is perfectly plausible to have a positive economic contribution, and yet have a negative economic impact.
It might be easiest to see this point if you visualize a new business that happens to use a lot of water (think a craft brewery) proposing to locate in a water-scarce region. It could be that that new demand for water could raise rates for everyone. If that negative economic impact is not considered, then the proposed project would look better for the area than it may actually be.
4. Economic impact or net economic benefit?
It’s important to remember that an economic impact is not the same as a net economic benefit. The net economic benefit of an activity is the degree to which that activity enhances social well-being in an area – and that well being is not always easily measurable in monetary terms. For example, suppose a factory moved into a neighborhood. The economic impact could easily be measured in monetary terms – number of jobs created, amount of revenue generated, etc., but if the pollution from the factory negatively affected people’s health, the net benefit could actually be negative. Environmental economists have ways of accounting for externalities such as pollution and natural resource degradation.
5. Economic benefit for whom?
This is one of the trickiest questions to answer. Let’s consider the manufacturing plant mentioned earlier. Yes, it might create a number of jobs, but if there is a mismatch between the skills needed at the plant and the skills of the local labor force, those jobs might not benefit the local population. Social impact analysis, whereby the distribution of benefits and costs among different sub- groups of the population are considered, could help answer that question.
Conclusion
There are many questions to consider when either undertaking or interpreting an economic analysis. These are only a few. If your organization is considering one, please give us a call. We’d be happy to help.
Hilger, J., Hallstein, E., Stevens, A.W. et al. Environ
Resource Econ (2019) 73: 307.
We found this article very interesting because of our recent
work with CEI on growing farmed scallop in Maine. Most research suggests that consumers are
willing to pay for environmental attributes (like sustainable harvest) in
seafood, but the majority of that research are stated preference, rather than
revealed preference, studies. In other words, they are studies of what
consumers say they’re going to do, rather than studies of what consumers do. It is more difficult to design a controlled
experiment that adequately captures consumers’ actual behavior than it is to
design a survey! This article uses a “natural experiment” by which the
researchers compared sales of seafood before and after a sustainability
labeling scheme (using red, yellow, and green labels) was implemented. The
researchers found that consumers did express preferences for wild-caught versus
farmed seafood, US-caught versus no-US caught seafood, and selective harvest
methods to less selective harvest methods. Another interesting aspect of this
paper is the discussion of the yellow label, which was described as “proceed
with caution” on the label but actually meant that not enough information was
available to make a final decision. Consumers seem to have responded to this
ambiguity by substituting away from this alternative altogether.
In yet another article investigating policy and its effect
on consumers, this article looks at Energy Star ™ labels on washers, dryers,
and air conditioners, and the effect of those standards on prices and consumer
behavior. Contrary to expectations, the
authors find that stricter standards increase consumer welfare, by encouraging
substitution towards more durable and energy-efficient goods.
This is a fascinating study of the effect of planting trees
on infant health in urban areas. Whereas most of the literature on the positive
effect of trees on health looks at the effect of proximity to green space on
health, this article takes advantage of the MillionTreesNYC program in New York
City to study the effect of planting trees on infant health. The authors use a
database from the US Centers for Disease Control to compare the health of
infants born to women in New York City to those born to women in similar areas
where no afforestation occurred. They
take advantage of several cutting-edge statistical methodologies to control for
confounding factors, such as socio-demographic factors. Their findings imply
that a twenty percent increase in in urban forest cover (such as occurred under
the program) decreased prematurity and low birth weight among mothers in New
York City by 2.1 and 0.24 percentage points, respectively, relative to similar
mothers outside of NYC. While this doesn’t seem like much, the difference in
low birth weight is equivalent to that of a mother who doesn’t smoke to a
mother who smokes two cigarettes a day during pregnancy. The effect seemed to
be greater among African American women, indicating that urban afforestation
may be significant equity effects as well.
Americans go through 102.1
billion plastic bags each year, and those bags end up everywhere. Whether they’re
in whale stomachs, or in our water as microplastics, the volume has people
concerned.
In an effort to reduce the amount of plastic, bans on
single-use plastic bags are on the rise. California and New York already have state-wide
bans, and Maine has just become the third state to do so. In other states,
cities like Boston, Seattle and Chicago have their own bans, and more seem
likely to follow.
While it’s popular to attack plastic bags, it’s still important
to ask questions to make sure the bans are necessary and effective.
Are plastic bags as bad as people think? What are the
alternatives, and are they any better? What impact do these bans have on
people’s behavior and the environment?
It turns out that when you look at the whole lifecycle of
different bags, and the unintended consequences of the bans, the results aren’t
straightforward.
Cost of Bag Production
The environmental cost of production is a good starting
point in measuring the impact of different bags. Contrary to what you might
think, from this perspective, plastic bags win out.
Plastic bags are made by using ethylene. Ethylene is a
by-product of the crude oil refining process and natural gas production. Manufacturing plants have also gotten very
efficient at making plastic, so this process doesn’t generate many greenhouse
gases per bag.
Even cotton tote bags aren’t better for single use. This is
because you need to factor in the land and water used to grow the cotton, as
well as the processing and production. One study found that you’d need to use
the tote bag at least 131
times to be better than a single-use plastic bag, based on the production
impact.
Recycling and Decomposing
One of the biggest problems with plastic bags is what
happens after they’re used. This is true whether they’re used once or a couple
of times.
While the bags can technically be recycled, municipalities
don’t accept them with other recyclables. This puts the burden on the consumer
to save them and bring them to a place that will accept them, and most people don’t go to the trouble.
When plastic doesn’t get recycled, it either goes into a
landfill or ends up as litter.
In a landfill, plastic takes an average of 500 years to
decompose. The volume of these bags in the trash also comes at a cost.
California alone spends $25M annually on disposal of plastic waste in
landfills.
Paper, on the other hand, decomposes in just two
to six weeks. It can also be easily recycled.
Other Impacts
of Plastic in the Environment
Additionally, when
plastic ends up as litter, the environmental impact is much worse than with
paper.
Plastic has become
one of the most common kinds of waste products, with much of it ending up in
the ocean. A study from UC Santa Barbara found that each year, the world’s
oceans receive almost 8 million metric tons of plastic.
One of the biggest
concerns with this is the impact on marine animals. Many are tempted to eat
plastic bags, thinking they’re food, but instead the bags block their
digestion. As many as 1 million sea
animals die each due to the plastic in the oceans. Among them was a dead sperm
whale found in April 2019 with 48 pounds of plastic in its stomach.
A less publicized
issue is the fact that plastic bags can cause problems in urban settings by
clogging waterways and drains. This was discovered as one of the primary factors in flooding in Bangladesh in 1988 and 1998, which led them to ban plastic
bags in 2002.
Microplastics are
another concern. These form when the plastic breaks down into smaller and
smaller pieces.
No one has enough
evidence to show any specific health impacts of microplastics, mostly because
it is unethical to ask human test subjects to ingest microplastics due to known
health hazards of plastic in general, but the amount and range makes it worth
watching. A 2017 study found that 94% of tap water samples from the United States contained
microplastics and other studies have found high concentrations
of microplastics in fish and shellfish commonly eaten by
humans.
Another study also
noted that when plastic bags are exposed to sunlight, they begin to give off
ethylene, and continue to do so even after the sun sets. This ethylene can contribute to the creation
of atmospheric carbon monoxide, a greenhouse gas.
.
These factors are
what make the plastic bag bans so popular, even though from a production
standpoint, they can do less environmental damage than the alternatives.
Considering
Consumer Behavior
One issue that policymakers
often overlook is how consumers will react to their policies. Production and
disposal are only one part of the story. It’s also important to consider if
people actually do reuse those bags, for what purpose, and how consumers will
change their behavior after a plastic bag ban.
In some cases,
people do use the plastic bags again, though often only one other time. The
most common examples are to line small trash cans and to pick up after dogs.
Those needs don’t disappear with the bans, and those are things you can’t use
tote bags for.
As a result, one
side effect of the bans is that people buy more trash bags for those purposes.
Rebecca Taylor, an economist at the University of Sydney, saw a 120% increase in sales of small, four-gallon trash bags.
From an environmental perspective, trash bags are worse than the single-use
bags, since trash bags are thicker than grocery bags. This means they use more
plastic, and it takes longer for them to degrade.
A quick glance at
the comments section of the Portland Press Herald, in an article announcing the
ban, revealed that many commenters were “hoarding” their plastic bags in
response to the ban, or even buying rolls of plastic bags in advance of the
law’s April 2020 effective date.
Additionally, the
use of paper bags increases significantly after bans. A survey of a few areas
in California found that paper bag usage jumped from 3% to 16%. This meant increased
production for paper bags, as well as higher volumes of paper trash.
Still, the bans do
encourage people to reuse bags by 40%. The bans also reduce the amount of
plastic that ends up as trash, which is the other piece to consider.
Conclusion –
It’s Complicated
Economists are
notorious for responding “it depends” when asked a question comparing two
alternatives. The impact of bans on
plastic bags is no different. Depending
on what you measure, you can find support for using plastic bags, and support
for banning them.
It’s important to
remember that the impact doesn’t stop with the manufacturing. It continues with
how the bags are used, and what happens with them when they’re no longer in
use. It’s also important to recognize that no law is ever passed in a vacuum.
We need to consider how people will respond, what alternatives are available to
them, and what the unintended consequences may be.
For generations most companies have measured their success
or failure by the amount of profits and losses they experience. This is in part because financial gains and
losses are easy to quanitfy, but also because legally a company owes a fiduciary duty of care
to its stockholders, and must weigh stockholder impact when making corporate
decisions. That impact is generally
measured in dollars and sometimes is taken to the extreme of “maximizing
shareholder value” above all else. Publicly
held companies, companies that sell stock to the general public, are required
to prepare annual reports that contain these gains and losses and file those
reports with the U.S. Securities and Exchange
Commission (SEC). Most companies
also issue a similar report for their stockholders and prospective investors.
But business is changing, and more and more companies are
seeking to measure their achievements in a manner that considers more than just
how much money they make; they want to include their social and environmental
impact as part of their success too. In
a business world where the common approach is to increase profit and maximize
the benefit to your stockholders, and in some cases face stockholder lawsuits
for NOT doing this, how can you find a way to include your social and
environmental impacts as part of your bottom line reporting?
Enter the benefit corporation and Certified B-Corporations
(often abbreviated to B-Corp).
Benefit Corporations and Certified B-Corps came into existence
to help companies that want to take a triple bottom line approach to how they
do business and how they report on their success. Benefit Corporations and Certified B-Corps are
often thought to be the same thing, but there are some important differences.
Benefit Corporation
A benefit corporation is a company that has legally incorporated as a benefit corporation in their state. Currently 34 states allow for companies to file as benefit corporations; a few of these states allow for benefit LLCs as well. If your state allows benefit corporations, you file to become one in the same way you file to become a traditional corporation. But what exactly is the difference between a benefit corporation and a traditional corporation?
When you file as a benefit corporation your legal
obligations and duties are expanded to include the company’s impact on society
and the environment. It allows company decision
makers to take actions that might create a greater benefit to society or lessen
the company’s impact on the environment even if those actions reduce company
profits or shareholder value. Company
decision makers are protected from potential shareholder claims when the
company takes such actions.
Benefit corporations publish annual reports just as
traditional corporations do, but they don’t just report on the financial bottom
line, the company’s social and environmental impacts are reported as well.
Certified B-Corp
You may have seen the Certified B-Corporation logo popping
up on websites, product labels, and office front doors in the past few
years. The Certified B-Corporation came
into existence to provide a way for those in states that do not currently have
the option of incorporating as a benefit corporation to be able to “consider the impact of their decisions on
their workers, customers, suppliers, community, and the environment” in
addition to the financial impact.
The certification is issued by the non-profit B-Lab. Companies who wish to become Certified
B-Corporations must apply via the bcorporation.net website. They undergo a review to assess the company’s
impact on “its workers, customers, community, and environment.” If the company scores high enough on its
review, they must then agree to transparency by making the report available on
the B-Corp website. Finally, they must take
the step of amending their bylaws, or other legal governing documents, to “require
their board of directors to balance profit and purpose” when make
decisions.
The B-Corp website states that there are currently 2,500
Certified B-Corps around the world.
There are many companies that are both benefit corporations and
Certified B-Corps. Having the third-party
B-Corp certification can demonstrate that a company is not just paying lip
service to triple bottom line accounting, but is actually actively pursuing a
more sustainable way of doing business.
Benefit corporations and B-Corp certification provide triple bottom line minded companies with a way of doing business that is in alignment with their purpose. Putting society and the environment on par with profits creates new avenues for such organizations to measure their success. The transparency required provides consumers and investors with the information they need to make decisions on which companies are in line with their personal values. In the end, having more companies that take a triple bottom line approach to doing business benefits us all.
On December 28, 2018, the Trump administration announced that the Mercury and Air Toxic Standards (MATS) that restrict mercury emissions were too costly and without enough benefits to make them necessary. Those in favor of the restrictions argue that the real cost comes from changing the standards.
Why is mercury an
issue?
Mercury is a heavy metal that is released into the
atmosphere from a variety of sources, with coal burning power plants being one
fo the primary sources. Once mercury is
released into the air, rain and snow send it to the waterways, where it
converts to the toxic methyl mercury. From there, it contaminates the water we
drink and begins to work its way up the food chain beginning with smaller fish
and accumulating at higher amounts in larger fish, such as salmon or tuna
exposing humans to further risk.
Difference in
cost-benefit analysis
The debate about the restrictions e. centered around the
cost-benefit analysis of MATS, and specifically around what should be considered
a co-benefit.
The original
analysis issued by the EPA in 2011
factored in the co-benefits
[JG1] of
reducing particulate matter (PM) as well as the direct benefit from cutting
back on hazardous air pollutant (HAP) emissions. In this analysis, the
projected health savings were $59 billion to $140 billion annually. This more
than offset the estimated $10.9 billion annual cost of regulating emissions.
Some of the health benefits identified include preventing:
6,800-17,000 premature deaths
120,000 cases of aggravated asthma
850,000 days of people missing work
5.1 million days of restricted activity
In 2018, though, the Environmental Protection Agency (EPA)
produced a Supplemental Cost Finding proposing that including co-benefits
related to PM is flawed, and the analysis should only consider quantifiable
benefits from HAP reductions.
Using this revised approach, the health-related co-benefits
would only be $4 to $6 million annually. Compared to the billions needed to
enact the regulations, the new finding claims that it is not “appropriate or
necessary” to regulate emissions, since it’s not cost-effective.
The proposal also indicates that while there are other
benefits, they are unquantified and not enough to support the stricter
standards.
Timing and intent
One of the surprises of the revised analysis is the timing.
When MATS was passed, facilities had up to 5 years to meet the standards. This
means that the majority have already paid to install the necessary technology
to reduce emissions. Changing the standards now won’t give them that money
back. On the other hand, many utilities are already recouping their investment
through regulated pricing.
This has raised some questions about the intent of the
supplemental analysis and who would benefit from the change.
Benefiting the coal
industry
Power plants are the primary source of most pollutants, and
within the power sector, coal-fired plants produce 99% of mercury emissions.
They also generate the majority of other pollutants. As a result, they’re the
most impacted by MATS.
Those coal plants would therefore stand to gain the most.
It’s uncertain how helpful this would be, however, given that coal-fired power
generation has fallen more than 40% since 2007.
Opening the door to
health problems
Changing the cost-benefit approach could set a dangerous precedent.
It could set a new standard the way health benefits are considered for all
future standards and environmental rulings. Such a change is significant
because of the potential damages.
Mercury is a neurotoxin that can damage the brains and
nervous systems of unborn babies and young children. As a result, consuming
fish with high mercury levels can cause serious harm, especially for children,
nursing mothers, and women who are pregnant or might become so. The EPA
estimates that each year, more than 300,000 newborns may have a higher percent
of learning disabilities due to mercury exposure.
Other health impacts can affect all ages and include damage
to the brain, heart, kidneys, liver, and immune systems. This can lead to
muscle weakness, loss of peripheral vision, lack of coordination, speech
impairment, and impaired hearing and walking.
Mercury is widespread
– including in Maine
What makes the health implications even more worrisome is
that mercury is widespread, and it lingers for a long time. A study by the EPA
in 2009 found that 48% of lakes and reservoirs nationwide had levels of mercury
exceeding the guidelines (0.3 parts per million).
Maine is far from immune, since prevailing winds bring
mercury emissions from coal-powered plants in the west. The state of Maine
already warns people that due to pollutants, they should not have more than two
servings of fresh-caught fish per month, depending on where fish are caught.
But restrictions on mercury emissions have been making a
difference. According to research done by Nicholas Fischer of Stony Brook
University in New York, mercury has been decreasing in the Gulf of Maine. This
has also led to lower levels of mercury in tuna, declining at the rate of 2%
per year.
Rolling back
standards has potential for increased costs in several areas
Those gains would likely be lost, though, if the new
proposal goes through. Also, while the coal industry might have a reduction in
costs, other sectors – such as recreation, education, and employment – could
see higher costs.
For example, the original cost-benefit analysis pointed to
5.1 million days of restricted activity due to emissions. Those impacted won’t
be out skiing, hiking, hunting, or fishing, something that hurts states like
Maine who have economies that are dependent upon eco-tourism.
The cost impacts on education is another factor. Mercury negatively
impacts the brainmdevelopment of young children who are exposed to it; children
effected by mercury exposure will need extra care and support in educational
settings. According to the National Education Association, a student who needs this sort of assistance can cost
$9,369 more to educate than a student who does not need assistance.
When these students
become adults, their opportunity for employment and earnings will likely
be reduced by those early health impacts.
Mercury levels also have implications for the fishing
industry. Bluefin tuna are only now beginning to make a comeback after
conservation efforts. They’ve recovered enough to allow some fishing in the
Gulf of Maine, including an 801-pound catch in 2018. Ttheir economic impact is
considerable. In 2013, a single bluefin sold for more than $1.75 million at a
Japanese auction.
Unfortunately, these tuna are also likely to have elevated
levels of mercury, especially if emissions increase. If the fish become more dangerous
to consume, they’ll be less viable in the Maine economy.
Additionally, mercury has a negative health impact directly
on fish. Elevated mercury levels can slow growth and development in wildlife
and fish, and reduce their rate of reproduction. That doesn’t bode well for an
economy that relies heavily on fishing and brought in $616.50 million in 2015.
Conclusion
Although the health benefits from reduced emissions are not
easily quantifiable, they are still significant and shouldn’t be discounted. It
also seems counter-productive to remove standards when the costs of
implementing them have already been paid. The Trump administration would do
better to leave the standards in place so the people of Maine, and the rest of
the country, can enjoy the benefits.
As an environmental
economist, I am in favor of increased wind power in the state. Renewable energy sources, such as wind,
solar, and in certain circumstances, hydropower, will help with our much needed transition away from fossil-fuel
based energy.. Furthermore, wind power provides
well-paying jobs in construction in primarily rural areas of the state, as well
as property taxes, the potential for income for rural landowners, and other
tangible benefits to host communities.
However, concerns
about large-scale wind farm development include potential negative impacts on
nearby residents, tourism, and wildlife.
Questions include:
Do wind farms enhance
or detract from tourism? Answer: it depends on the context. Some studies have found that proposed wind
farms affect potential demand for tourism, but those studies are hypothetical,
not actual. A recent
study in Scotland found that there was no correlation between existing
windfarms and tourism-related employment. Other case
studies have shown that wind farms can actually be a boon to tourism, if
local tourism agencies market them as a tourist attraction . More work needs to be done on looking at the
effect of actual, operating wind farms on tourism in different contexts. In any case, the concern about conflicts
between wind farms and tourism can be mitigated by proper planning and siting.
Do wind farms have a
significant impact on migratory birds?
The answer here depends on what you consider significant, and again, it
depends on the context. Wind turbines
located in migratory corridors have been linked to avian mortality, and those
deaths are increasing as wind power generation itself increases. Still, some studies suggest that wind-power related
avian deaths are less than those associated with other forms of energy, and
much less than those associated with the average housecat. However, that does not mean we should brush
those concerns away lightly. New technologies in turbine and blade design, as
well as proper modeling and siting procedures – as well as simply shutting down
generation during peak migration – should
mitigate this concern.
Do wind farms increase
or decrease property values or property taxes? Evidence shows that large-scale
wind development in residential areas does have a negative impact on homes in
direct proximity (much like any other energy-related infrastructure), and that
this effect
declines as distance to the wind farm increase. However, properties in rural areas that are
host to a turbine can see an increase, as the potential for income from the
land is realized https://www.cfra.org/news/180719/are-property-values-affected-wind-farms. There also is evidence that the added property
tax revenue from a wind farm can reduce a town’s overall mil
rate. Again, these concerns can be
mitigated by proper planning and siting.
In other words, evidence
abounds on both sides of the debate, and is context-specific. We do need to be
cautious about where these facilities are located, from an environmental and
aesthetic context. But in the words of Governor Mills: “It is time for Maine to
send a positive signal to renewable energy investors and innovators.”
Note: This blog post is based on a “Maine Voices” column written by Dr. Bouvier
and published in February of 2018
\lsdpri
France’s Yellow Vest Riots: Death Knell for a Carbon Tax?
By the time this blog post comes out, the “yellow vest” riots in France may be old news. But this fall, people took to the streets of France, seemingly angered by a proposed fuel tax. Opponents of carbon taxes were quick to declare victory: if France, a country with a fairly liberal (in the American sense of the word) populace, reacted with such anger to a proposed carbon tax, then clearly it is not a sound policy.
Not so fast. As any student of
political science could tell you, context matters. France’s president, Emmanuel
Macron, was fairly unpopular among certain groups before the tax was proposed.
Part of this was class based: Macron is seen by some as the “president of the
rich,” partially due to the repeal of a tax on the very wealthy, which only
served to stoke already
simmering class resentments. The proposed fuel tax would have hit
low-income rural voters the hardest, a constituency that was already smarting under
an oil tax that Macron had implemented earlier in the year. If Macron hadn’t
already angered that constituency, would the riots have occurred? It’s hard to
say. France, after all, is a party to the Paris accord, and Macron was elected
in part based on his promise to do something about climate change.
Secondly, not all carbon taxes are created equal. The proposed
policy in France took the shape of a fuel tax, one that would have increased the
already high price that French consumers pay at the pump. A certain amount of
an increase in fuel price is pretty much unavoidable. As greenhouse gases are
formed by the combustion of fossil fuels, policies to reduce the use of those
fuels is naturally going to impact, in one way or another, the users of those
fuels. But the proper design of such a policy could help lessen their impact.
Carbon taxes can be placed at several different places in
the “life” of a carbon atom. A tax on gasoline, which is what France proposed,
is placed at the very end of the production and consumption process. It would
affect low income and rural consumers more heavily, because those users consume
disproportionately more gasoline. (Macron didn’t help his case by suggesting
that rural folks carpool more often, displaying a serious
misunderstanding of the lives of his rural constituents.)
Other forms of a carbon tax could be imposed (at least
theoretically) during the extraction process: i.e., when the fossil fuel is
extracted from the earth. In France, however, there is very little
oil and natural gas production. Most
of France’s energy comes from fossil fuel free nuclear power. While
that means that France’s energy sector is much less carbon intensive than other
countries’, it doesn’t leave them much wiggle room to reduce emissions
elsewhere.
Thirdly, the way the revenue from the tax is “recycled”
matters. By recycling the revenue and
returning it to households in some way, governments can reduce the regressivity
of the carbon tax. Current proposals include reducing the payroll tax, reducing
the capital gains tax, or simply returning it to households on a per person basis,
much like the Alaskan
Permanent Fund. You can read
more about revenue recycling in our
earlier blog post.
The difficulty is that such schemes are complicated, and hard to explain to the general public. Add that complexity to Macron’s apparent communication problems, simmering class resentments, and increasing economic stress, and you have a problem. But don’t assume that all carbon taxes are politically infeasible. Like most other policies, they need to be designed – and communicated – effectively.
Image: Lionel Allorge [GFDL (http://www.gnu.org/copyleft/fdl.html), CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0) or FAL], from Wikimedia Commons
This article uses a hedonic analysis to investigate the
effect of wind turbines on property values, and whether that effect seems to
differ between communities that are opposed to wind power, versus those that
support it. Past studies investigating the effect of wind turbines on property
values have been mixed, with some studies showing negative effects, while other
studies show no effects. This study hypothesizes that there may be other
characteristics of the communities that influence any property value effects.
Results indicate that property value impacts in communities that were opposed
to the wind farm prior to construction were greater than those in communities
in which no prior opposition was found. The author concludes that turbine
impacts in a jurisdiction “may be influenced by attitudes toward wind energy in
that jurisdiction, and that public perception regarding wind energy and its
potential impacts is a prominent contributing factor to the nature of observed
impacts on property values.”
Rising sea levels and
sinking property values: Hurricane Sandy and New York’s housing market
This paper analyzes the effects of Hurricane Sandy on the
New York City housing market from 2003-2017. Their results indicate a
persistent negative effect among properties within the flood zone that had not
been damaged by the storm. In contrast, properties that had been damaged by the
storm suffered an immediate negative price effect that was up to three times as
great, followed by a gradual convergence to the level of nondamaged properties.
The authors conclude that the housing market in New York City has been affected
by greater awareness of flood risk following Hurricane Sandy.
Mercury pollution,
information, and property values
Chuan Tang, Martin D. Heintzelman, Thomas M. Holsen
Continuing our property value theme, Tang et al.
investigated the influence of mercury pollution on property values, as an
implicit value of mercury pollution reduction. They looked at approximately
83,000 property transactions in New York State over a 9-year period. Results demonstrated that property values within
one mile of a lake for which an advisory had been issued were 6-7 percent lower
than similar properties surrounding a lake for which no such designation had
been made. Their results “can serve as a partial indication of the benefits of
the Mercury and Air Toxic Standards (MATS), which includes the first mercury
emission standard in the United States.” It’s worth noting that the
Environmental Protection Agency is currently reviewing a proposal that could
undermine the MATS.
Eliciting preferences
for urban parks
Toke Emil Panduro, Cathrine Ulla Jensen, Thomas Hedemark Lundhede,
Kathrinevon Graevenitz, Bo Jellesmark Thorsen
Yet another article investigates the effects of urban parks
on adjacent property values. The authors
estimate residents’ willingness to pay for park availability in Copenhagen,
Denmark, by investigating the effects of distance to a park and park density on
apartment rents. The authors claim: “‘Parks
provide recreational opportunities for urban residents and visitors. Urban
green spaces furthermore provide climate regulation functions, harbor
biodiversity and provide other ecosystem services… However, in the absence of
thorough insights into the values of urban green space, the need for such
regulation [to provide urban parks] may be neglected whenever new neighborhoods
are planned and developed.” One of the interesting things about this paper is
that it investigates both proximity to and density of green spaces and finds
that both measures are important and capture different components of
willingness to pay. The article finds that
proximity to green space has a positive effect on apartment rents (meaning that
people are willing to pay more to live near a green space, all else being
equal), and that there may be a “saturation point” beyond which an additional
park does not add significantly to household welfare.